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Write off customer and supplier balances

by Intuit Updated 2 months ago

You may have small balances that are the result of an error, an overpayment, or an underpayment. Often it would cost more time and materials to collect or pay the amount due than it would be to clear it from your accounts.

We recommend two ways to remove the amounts. Make sure to consult your accounting professional before trying any of these options.

Option 1: Create a general journal entry to write off the amount

Accounts receivable

Create a general journal entry

  1. From the Company menu, select Make General Journal Entries.
  2. In the Make General Journal Entries window, change the date and fill in the entry number if necessary.
  3. For customers with an overpayment:
    1. For the Account field, select Accounts Receivable from the dropdown list.
    2. Enter the amount under the Debit column.
    3. In the Name column, select a customer name from the dropdown list.
    4. In the next line, select the offset account and enter the amount under the Credit column. The offset account is usually an Expense account.
  4. For customers with an underpayment:
    1. Select the Account field and select Accounts Receivable.
    2. Enter the amount under the Credit column.
    3. In the Name column, select a customer name from the dropdown list.
    4. In the next line, select the offset account and enter the amount under the Debit column.
  5. Select Save & Close.

Apply the general journal entry to the existing credit/debit

  1. From the Customers menu, select Receive Payments.
  2. Select the customer in the Received From field.
  3. Select the invoice, then select Discounts and Credits.
  4. Under the Credits tab, select the available credit and select Done.
  5. Select Save & Close.

Accounts payable

Create a general journal entry

  1. From the Company menu, select Make General Journal Entries.
  2. In the Make General Journal Entries window, change the date and fill in the entry number if necessary.
  3. For suppliers with an overpayment:
    1. For the Account field, select Accounts Receivable from the dropdown list.
    2. Enter the amount under the Credit column.
    3. In the Name column, select a supplier name from the dropdown list.
    4. In the next line, select the offset account and enter the amount under the Debit column.
  4. For suppliers with an underpayment:
    1. Select the Account field and select Accounts Receivable.
    2. Enter the amount under the Debit column.
    3. In the Name column, select a supplier name from the dropdown list.
    4. In the next line, select the offset account and enter the amount under the Credit column.
  5. Select Save & Close.

Apply the general journal entry to the existing credit/debit

  1. From the Suppliers menu, select Pay Bills.
  2. Select the bill, then select Set Credits.
  3. Under the Credits tab, select the available credit and select Done.
  4. Select Save & Close.

Option 2: Use discounts to write off small amounts

Create an account and item to use when writing off small amounts

  1. Create a Charge off Account:
    1. From the Lists menu, select Chart of Accounts.
    2. From the Account dropdown list select New.
    3. Select Income, then select Continue.
    4. In the Account Name field, enter Minor A/R and A/P Charge-Off.
    5. Select Save & Close.
  2. Create a Charge-off item:
    1. From the Lists menu, select Item List.
    2. From the Item dropdown list select New.
    3. Select Other Charge as Type.
    4. In the Item Name/Number field, enter Minor Charge-Off.
    5. In the Tax Code field, select Non-Taxable.
    6. In the Account field select Minor A/R and A/P Charge-Off.
    7. Select OK.

Select the scenario that best describes the small amount that you want to clear

Customer underpayment

  1. From the Customers menu, select Receive Payments.
  2. From the Received From dropdown list, select the customer.
  3. Select the invoice you want to write off, then select Discounts and Credits.
  4. Select the Discount tab:
    1. Enter the Amount of Discount.
    2. From the Discount Account dropdown list, select Minor A/R and A/P Charge-Off.
    3. Select Done.
  5. Select Save & Close.

Customer overpayment

  1. From the Customers menu, select Create Invoices.
  2. From the Customer: Job dropdown list, select the customer.
  3. In the Item field, select Minor Charge-Off and enter the amount for overpayment.
  4. Select Apply Credits.
  5. In the Available Credits section, select the credit (the credit amount should match the invoice amount).
  6. Select Done.
  7. Select Save & Close.

Supplier underpayment

  1. From the Suppliers menu, select Pay Bills.
  2. Select the bill with the balance you need to write off.
  3. Select Set Discount.
  4. Select the Discount tab:
    1. Enter the Amount of Discount.
    2. From the Discount Account dropdown list, select Minor A/R and A/P Charge-Off.
    3. Select Done.
  5. Select Pay Selected Bills.
  6. Select Done.

Supplier overpayment

  1. Enter a bill that will offset the credit.
    1. From the Suppliers menu, select Enter Bills.
    2. Select a Supplier.
    3. Select the Items tab, and in the Item field select Minor Charge-Off.
    4. Select Save & Close.
  2. Apply the available credit to the bill you created.
    1. From the Suppliers menu, select Pay Bills.
    2. Select the bill you entered to offset the credit.
    3. Select Set Credits.
    4. In the Credits tab select the credit.
    5. Select Done.
    6. Select Pay Selected Bills.
    7. Select Done.

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